the business plan and other ‘riveting’ documents january 28, 2012
DESCRIPTION
The Business Plan and Other ‘Riveting’ Documents January 28, 2012. David R Clark Director of Investment Services. Pop Quiz. I want to start a new venture because : My invention/discovery will help mankind. I want to build a company dominant in the market. I want to get rich. - PowerPoint PPT PresentationTRANSCRIPT
David R ClarkDirector of Investment
Services
Pop Quiz
I want to start a new venture because:a)My invention/discovery will help
mankind.b)I want to build a company dominant in
the market.c)I want to get rich.d)All of the above
Recommended Documents
(In order of importance)1. Investor Presentation2. Elevator Speech3. Business Plan4. Executive Summary5. One Page Summary6. Customer Brochure
Recommended Documents
(Probable Chronology)1. Business Plan2. Elevator Speech3. Investor Presentation4. Executive Summary5. One Page Summary6. Customer Brochure
What they want to know
1. What is the technology?2. How big is the market?3. Who is on the Management
Team?4. Is this a good deal?
Venture Investment 101
Investor Presentation• Single most important
aspect of fund raising• Play to your audience• Be respectful of time• Business attire• Objectives:
– Not to close the deal– Invitation to ‘talk’– Build investor confidence
in you
Typical South Texas Format
• Presentation: 20 minutes• Q&A: 20 minutes• Investor discussion: 20 minutes
– You’re not in the room• Timekeeper usually present• BTW: This is a ‘somewhat’ universal
format for angel groups
Content Elements
• The problem?• Product/Service• Value proposition• Market • Competition• Competitive
advantage
• Management team
• Revenue model– Revenue received
• Funding request• Uses of funding• Funding
milestones• Pre-money cap
table
Content Timing
• Every deal is different• It’s your message and your deal• However,
– Management– Technology– Market– Financials
Coaching Tips• Show passion• Show confidence• Demonstrate knowledge• Minimize hyperbole
– Name dropping• It’s a business deal not an
invention• Presentation Team members• Consistent team attire
More Coaching Tips• Graphics, color, & photo’s• No hard to read slides
– 10-20-30 rule• Do not read the slides
– Watch the audience• Well choreographed• Numbers all ‘foot’• Copies for audience• “show & tell”• Practice timing
Q&A Coaching Tips• Short direct answers• No ‘piling on’ • Backup slides
– Cheat sheet• Curve balls
– May be asked for a term sheet– Avoid technical discussions– Don’t get defensive or angry
Après-Presentation• Do a post mortem on each
presentation given• Build an inventory of slides • Be prepared to give many
presentations• Remember you are only
looking for a few investors• Expect ‘stay in touch’
Why a Business Plan?Business Strategies
Product DevelopmentSales & MarketingFinancialOthers
Management in sync(Equity Funding World)
Sell the ventureDue Diligence
Preliminary Remarks
No proprietary warningsAbout 20 pages without exhibits
About 6500 -7500 words10 or 12 pt Times New RomanSpellchecker
Flesch-Kincaid Readability <30Table of Contents and page numbers
Technology
Detailed description of the problemSet up the Value Proposition
What is the solution5th grader rule
Product DescriptionFeatureFunctionBenefit
Intellectual PropertyState of Development
Market NeedMarket SizeCompetition
Direct & IndirectDifferentiatorsPricing StrategySales Strategy and processRevenue sources
Market
Management Team
Who is on the teamDomain ExpertiseEntrepreneurial ExperienceBoard of Advisors
Attractive Investment
Pro Forma P&L – To Exit (5-7 years)Assumptions driving the numbers 20X N5
Pro Forma Balance SheetCap tableFunding RequestPro Forma Cash FlowThe ‘Deal’ and Liquidity EventsUse of Funds
Integrated timeline
Integrated Timeline ($K)
Development
Sales & Mkting
Cash
Investment
Alpha Beta Production
Hire Sales Sign 1st Distr 1st Sale
$20
$150 $350
$110 $15 $135$90$205 $120
Continued Sales
Cosmetics & Presentation
Lots of graphics and colorPuppies & KittensProfessional binding with heavy paperDouble sided printingMay want to consider a Marketing
Communications advisorThe objective is make it easy to read
What really happens
1. Read the first paragraph2. Look at the financials
$ Revenue line3. Look at the Management Team
Is there a ‘hook’?
How much &20X N5?
Can they pull this off?
23
The Elevator Pitch
• Origins in “.com” period around 2000
• Short pitch which tells potential investor about the deal
• Objective is to get an invite to present the deal
• Could be investors ‘first cut’
24
Key Elements
• Early ‘hook’• Brief description of the product or
service• Revenue model• Management team• Competition• Competitive advantage• Call to action
25
Sample PitchSeekingCapital.com is changing the future of private equity investing. Private equity is a $100 billion a year market, with over 400,000 entrepreneurs aggressively seeking
capital at any given time.
SeekingCapital.com offers entrepreneurs and investors an efficient and uniquely interactive method for obtaining or investing capital in pre-IPO companies.
SeekingCapital.com is not an "Internet only" company, but supports its online community with local
franchises in the United States and internationally.
Our team has decades of experience in the securities industry, investment banking, private equity, and executive management. My partner and I have worked together side by side for several years co-managing and running the entire Internet operations of a publicly traded brokerage firm.
Our competitors such as XYZ Corp. and ABC Capital have had much success-ABC Capital was recently valued at $550 million . . . despite several limitations.
SeekingCapital.com isn't just a listing or matching service, we offer a community that breeds interaction, education, and discussion. We work with companies globally, through all stages of funding, and across all industries.
We are anticipating $XXX million this round to be used for employee building, increased office space, and marketing.
We have a compelling two page executive summary that I would like to send you. Can I get your address?
Hook
Product/Service
Market
Revenue
Competition
Advantage
Call to action
Management
26
Coaching Tips• Show passion• Show confidence• Minimize hyperbole• It’s a business deal not
an invention• Google “elevator pitch”
Biggest Mistakes by Entrepreneurs
1. Too much on the technology2. Too little on the Management Team3. Failure to abide by the ‘5th grader rule’.4. Failure to articulate the Value Proposition5. “There is no competition.”6. “This assumes only a 1% market penetration.”7. Too much or too little detail on the Pro Forma8. Does not state ‘The Deal’
